To the Water Palace

After leaving Potos, you can either take the cannon travel to your right, or you can just walk to the Water Palace by following the path down, and then up and to the left at the fork in the road. Outside the palace you'll see Dyluck and some other Pandoran soldiers talking about attacking Elinee in the forest. Just keep heading north and you'll run into Jema outside the palace.

Follow him inside to find Luka, the guardian of the Water Palace. She explains that the empire is trying to revive the Mana Fortress from the past, and that Randi and the Mana Sword are needed to stop them. She explains how to increase the Sword's power by visiting all of the Palaces around the world and connecting the Sword with the Mana Seeds. She then instructs Jema to go to Pandora, as strange things have been happening there, and for Randi to head to Gaea's Navel to seek out the dwarves. The dwarves may be able to fix the Mana Sword for Randi. She also gives you the Spear, and tells you it was a weapon used by mana guardians long ago, and to keep an eye out for more weapons like it.